iTrack™ is the only illuminated, micron-scale microcatheter designed to viscodilate Schlemm’s canal during MIGS with ABiC™. A standout feature of the iTrack™ is its illuminated tip, which allows you to continually monitor its location during canal circumnavigation.

ABiC WITH iTRACK

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Performed as a standalone procedure or as an adjunct to cataract surgery, ABiC is a new MIGS procedure that can comprehensively restore the natural outflow pathway in glaucoma patients.

Introducing a new comprenhensive MIGS

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Vitreolysis. Redefining Convention.

Virtually every individual will experience the visual shadows caused by vitreous strands and opacities during their lifetime. Vitreolysis provides an effective outpatient-based treatment for floaters and overcomes many of the risks associated with traditional surgery.

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SLT. Gentle. Effective Repeatable.

A highly effective approach for first-line glaucoma treatments, as adjunct therapy with drugs, and as alternative therapy when drugs or surgery fail, Selective Laser Trabeculoplasty (SLT) stimulates a natural healing response in the eye to manage intraocular pressure.

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2RT® is a nanosecond laser therapy that stimulates a natural, biological healing response in the eye to treat degenerative retinal disease, including AMD.

For 30 years, Ellex has been at the forefront of ophthalmic innovation, introducing cutting-edge products and technologies for the diagnosis and treatment of eye disease.

Pioneering solutions for eye care since 1985.

For more than 30 years, Ellex has been committed to the fight against blindness. Our vision is to pioneer integrated medical technologies and solutions for the diagnosis and treatment of eye disease.

A Global Outlook.

Over the years, Ellex has evolved from a small scientific laser company to a global leader in medical technologies. Today, more than 30,000 Ellex laser and ultrasound systems are used around the world in the fight against blindness.

28 July 2017

Trading Update Earnings

 Earnings affected by appreciation of AUD against USD & Euro as well as plannedmaterial investment in new highly prospective product segment – Ellex iTrackTMAdelaide, Australia, DATE – Ellex Medical Lasers Limited (ASX:ELX), a global leader in medical devices for the diagnosis and treatment of eye disease, today announced that it expects to report profit before tax (PBT) for the fiscal year ended 30 June, 2017 as described in the table below.

FY17 A$ Million – Reported profit before tax.

Lasers & Ultrasound

iTrackTM

2RT

Corporate

Total

Revenue

62.4

8.2

1.0

–

71.6

EBITDA/(loss)

7.4

(1.3)

(0.6)

(4.1)

1.4

Amortisation & interest

(2.8)

(0.6)

–

–

(3.4)

Profit before tax/(loss)

4.6

(1.9)

0.6

(4.1)

(2.0)

As flagged previously, the business has committed to a major investment in the iTrackTM business segment, as well as the 2RT laser, both of which have the potential to be significant markets for Ellex.

In addition, the Company’s earnings have been affected by appreciation in the value of the AUD against the USD and Euro as well as one off costs associated with the Company’s move to its new Adelaide Headquarters, which is expected to produce significant operational improvements and increases in manufacturing capacity moving forward.

Corporate costs in 2017 were in line with the prior corresponding period.

On an underlying basis (adjusting currently fluctuations and abnormal expense) 2017 earnings in each of its 3 business segments are as follows:

FY17 A$ Million – EBITDA Underlying

Lasers & Ultrasound

iTrackTM

2RT

Corporate

Total

EBITDA reported

7.4

(1.3)

(0.6)

(4.1)

1.4

FX impact

1.2

0.1

1.3

Non-recurring move costs

0.4

–

–

–

0.4

EBITDA Underlying

9.0

(1.2)

(0.6)

(4.1)

3.1

Recap on Strategy

Ellex is a trusted global, ophthalmic brand. Ellex has materially grown shareholder value by leveraging that brand through its investment in Ellex iTrackTM, a minimally invasive glaucoma surgery (MIGS) device. Based on independent data from Marketscope, the annual market for MIGS is expected to grow from approximately US$200 million today to US$1 billion by 2021. To that end, iTrackTM offers a significant growth opportunity for our business.

Ellex iTrackTM

The sales performance of the Company’s iTrackTM technology was strong during the 2017 financial year, with sales expected to be $8.2 million ($8.5 million in constant currency). This represents 41% annual growth in unit sales compared to the prior comparable period. In the USA, iTrackTM sales were $4.7 million, achieving sales growth of 53% in Q4 FY17. This material growth was driven by the favourable increase in procedural reimbursement, and by the recruitment of sales representatives. As of 30 June 2017, the Ellex iTrackTM business comprised 14 clinical trainers and sales representatives, covering all regions of the USA. This compares to four clinical trainers and sales representatives at the commencement of the 2017 financial year.

Sales outside of the USA are expected to be $3.5 million, an uplift of 49% on the prior comparable period. Growth outside of the USA was primarily driven by continued take-up in China and investment in additional management and marketing.

In addition to the USA, sales force costs have been incurred for improvements in structure, sales support, reimbursement management, production team and production site expansion, enhanced distribution management, tradeshow attendance and symposiums, journal publications and key opinion leader engagement. As a result, EBITDA for the iTrackTM segment experienced an EBITDA level loss of $1.3m in 2017 (compared with an EBITDA of $1.1m in 2016).

Lasers & Ultrasound

Underlying EBITDA of approximately $9.0m compares with $10.4m in 2016. EBITDA in 2017 for the laser and ultrasound segment was affected by decreases in revenues, increased investment in additional marketing and additional sales personnel in USA & Germany, and the result of $0.4m non-recurring cost associated with the expansion and move of production facilities from central Adelaide, South Australia to northern Adelaide.

2RT

Underlying EBITDA level loss of approximately $0.6m compares with EBITDA of $0.3m in 2017. EBITDA for the 2RT business segment fell as a result of additional marketing and selling activities including liaising with, and learning from, the experiences of the growing pool of 2RT early adopters. This will support the commercial roll-out in FY19.

Additional details are attached.

FY18 Outlook

In the 2018 financial year Ellex will implement an aggressive growth strategy for Ellex iTrackTM, comprising significant additional (above 2017 financial year levels) sales and marketing expenditure. This investment is expected to materially accelerate the strong sales growth of 53% achieved in the USA in the fourth quarter of the 2017 financial year. The roll-out of the iTrackTM in China and in Europe is also expected to further bolster iTrackTM sales growth.

Key initiatives include expansion of the USA sales team, additional clinical trainers both within and outside the USA, expanded collaboration with key opinion leaders, greater presence at key industry events and a stronger share of voice in the various industry publications. These initiatives will add materially to costs and we expect that the iTrackTM business will incur a larger EBITDA level loss in FY18 than it did in FY17.

For the laser & ultrasound segment, subject to global economic conditions, in particular the stability of the foreign exchange rate between the A$ and the Euro, US$ and YEN, growth in sales and EBITDA is expected in FY18. Particular drivers of growth will include sale of lasers for treating floaters, a new ultrasound product and the cross-selling of glaucoma lasers with Ellex iTrackTM.

Until the results of the seminal LEAD (Laser intervention for Early Age related macular degeneration) clinical trial are known in the first half of FY19, EBITDA level losses in the 2RT segment will continue. A successful trial however may result in meaningful sales for 2RT commencing in the second half of FY19.

These results mentioned above are a preliminary estimate and prior to finalisation of the annual audit by the Company auditors. Ellex expects to report its full-year results for the year ended 30 June 2017 during the week beginning 21 August 2017.

ABOUT ELLEX

Ellex designs, develops, manufactures and sells innovative products that help eye surgeons around the world to effectively and efficiently treat eye disease. Ellex is a world leader in this field. Headquartered in Adelaide, Australia, Ellex has ophthalmic lasers and devices that treat glaucoma, retinal disease primarily caused by diabetes, secondary cataract and vitreous opacities, as well as age-related macular degeneration. Manufacturing is carried out in Adelaide, Australia and Fremont, California. Sales and service directly to eye surgeons is conducted via subsidiary offices in Fremont, Minneapolis, Lyon, Berlin and Tokyo. A network of more than 50 distribution partners around the world services other markets.

For additional information about Ellex and its products, please visit www.ellex.com